Question

Jocelyn invested $390 in an account paying an interest rate of 2.7%

compounded daily. Assuming no deposits or withdrawals are made,
how much money, to the nearest cent, would be in the account after 18
years?

Answer 1

There will be $634.05 in the account.

Explanation:

Compound interest:

The compound interest formula is given by:

`A(t) = P(1 + (r)/(n))^(nt)`

Where A(t) is the amount of money after t years, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per year and t is the time in years for which the money is invested or borrowed.

$390 in an account paying an interest rate of 2.7% compounded daily.

This means that
`P = 390, r = 0.027, n = 365`

Assuming no deposits or withdrawals are made, how much money, to the nearest cent, would be in the account after 18 years?

This is A(18). So

`A(t) = P(1 + (r)/(n))^(nt)`

`A(18) = 390(1 + (0.027)/(365))^(365*18)`

`A(18) = 634.05`

There will be $634.05 in the account.